HMRC has a number of ways to discover who holds cryptocurrency by sending data requests to crypto exchanges and other financial organisations. This is permitted under various international treaties the UK has signed up to.
"So, don't try to hide your cryptocurrency income!"
HMRC has confirmed it has been sending nudge letters to UK based investors it knows about who it believes may have underpaid any tax on their cryptocurrency transactions. The purpose is to encourage individuals to pay the right amount of Income Tax and Capital Gains Tax in a timely manner.
HMRC doesn't consider cryptocurrency to be actual money, but it does believe tax is payable on profits received from its disposal. So, if you're selling, exchanging or using cryptocurrency, then you need to pay the relevant taxes.
If you do receive communication from HMRC, then you may not have made a mistake on your tax return or forgotten to make a disclosure, but you shouldn't ignore the letter.
Speak to your tax advisor before returning any information they've requested.
Until next time ...
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Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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